The UK commercial property market is strengthening, with industrial space outperforming office and retail, according to the Royal Institute of Chartered Surveyors’ (RICS) UK Commercial Property Market Survey.

As investor demand increased for UK commercial property across all sectors, with 18% more respondents reporting a pick-up in enquiries, industrial assets were most sought after in the first quarter.

RICS said 28% more respondents saw an increase in demand for industrial space across the UK in the time period.

Simon Rubinsohn, RICS chief economist, said: “The results of the latest commercial property survey chime with much of the recent generally more positive economic news flow.

“The forward-looking indicators are also proving relatively resilient, although it would not be a surprise if activity slows somewhat ahead of the forthcoming general election.”

Although around one-sixth of respondents continued to report enquiries from British businesses looking to find space to utilise elsewhere in the EU, foreign investment in the UK was, Rubinsohn said, continuing to recover. The RICS overseas demand indicator rose for all sectors at a headline level and in most parts of the country, he said. 

Overseas investment demand also grew across all sectors in the first quarter, with buyers showing a slight preference for industrial space.

The industrial sector also performed strongly in terms of capital value expectations, with 44% more respondents anticipating prices to rise over the next three months. 

Tenant demand for commercial property in the UK increased for the third consecutive quarter with 12% more respondents seeing a rise in demand.

Given the demand and supply dynamics, respondents expected rents to see the strongest growth in the industrial sector, both over the next three months, and at the 12-month horizon. At the same time, offices were expected to see only modest growth, while rents were anticipated to hold steady in retail.